GOLD X2 MINING INC. — Annual Report 2021

Jul 30, 2021

GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company)

Financial Statements

For The Years Ended March 31, 2021 and 2020

In Canadian Dollars

Baker Tilly WM LLP 900 – 400 Burrard Street Vancouver, British Columbia Canada V6C 3B7 T: +1 604.684.6212 F: +1 604.688.3497

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vancouver@bakertilly.ca www.bakertilly.ca

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Goldshore Resources Inc. (formerly Sierra Madre Developments Inc.):

Opinion

We have audited the financial statements of Goldshore Resources Inc. (formerly Sierra Madre Developments Inc.), which comprise the statements of financial position as at March 31, 2021 and March 31, 2020, and the statements of loss and comprehensive loss, statements of changes in shareholders’ equity and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2021 and March 31, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial statements, which describes events and conditions indicating that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Management’s Discussion & Analysis filed with the relevant Canadian securities commissions.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

ASSURANCE • TAX • ADVISORY

Baker Tilly WM LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly International Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities.

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In connection with our audits of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits and remain alert for indications that the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Graeme L. Cocke.

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CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, B.C. July 29, 2021

GOLDSHORE RESOURCES INC. (FORMERLY SIERRA MADRE DEVELOPMENTS INC.) (AN EXPLORATION STAGE COMPANY) Statements of Financial Position As at,

(in Canadian Dollars)

	March 31, 2021	March 31, 2021	March 31, 2020	March 31, 2020
ASSETS
Current assets
Cash	$	374,231	$	5,882
Restricted cash (Note 4)		9,420,580		-
Amounts receivable		1,820		15,733
Deferred financing costs (Note 4)		881,876		-
TOTAL ASSETS	$	10,678,507	$	21,615
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (Note 5)	$	9,849	$	488,612
Subscriptions received in advance(Note 4)		10,000,000		-
TOTAL LIABILITIES		10,009,849		488,612
SHAREHOLDERS’ EQUITY (DEFICIT)
Share capital (Note 4)		8,437,198		7,437,198
Reserve (Note 4)		1,505,727		1,203,271
Accumulated deficit		(9,274,267)		(9,107,466)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		668,658		(466,997)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY(DEFICIT)	$	10,678,507	$	21,615

Nature and continuance of operations (Note 1)

These financial statements were authorized for issue by the Board of Directors on July 29, 2021. They are signed on behalf of the Board of Directors by:

"Brett Richards"	“Joanna Pearson”
CEO and Director	Director

The accompanying notes are an integral part of these financial statements.

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GOLDSHORE RESOURCES INC. (FORMERLY SIERRA MADRE DEVELOPMENTS INC.) (AN EXPLORATION STAGE COMPANY) Statements of Loss and Comprehensive Loss

(in Canadian Dollars)

		For the Years Ended	For the Years Ended
	March 31, 2021		**March **	31, 2020
EXPENSES
Bank charges		$ 291	$	97
Exploration and evaluation expenditures (recovery)		-		(35,200)
General and administrative fees		33,292		169
Insurance		-		(2,565)
Professional fees		95,846		59,698
Regulatory fees		37,372		17,668
NET AND COMPREHENSIVE LOSS FOR THE YEAR	$	(166,801)	$	(39,867)
Basic and diluted loss per share for the year	$	(0.06)	$	(0.04)
Weighted average number of common shares outstanding		2,718,719		899,845

The accompanying notes are an integral part of these financial statements.

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GOLDSHORE RESOURCES INC. (FORMERLY SIERRA MADRE DEVELOPMENTS INC.) (AN EXPLORATION STAGE COMPANY) Statements of Changes in Shareholders’ Equity

(in Canadian Dollars)

	Number of
	shares		Amount		Reserve	Accumulated deficit			Total
Balance at March 31, 2019	899,845	$	7,437,198	$	930,281	$	(9,067,599)	$	(700,120)
Restatement for disposal of subsidiary	-		-		272,990		-		272,990
Net and comprehensive loss for theyear	-		-		-		(39,867)		(39,867)
Balance at March 31, 2020	899,845	$	7,437,198	$	1,203,271	$	(9,107,466)	$	(466,997)
Common shares issued (Note 4)	2,777,778		1,000,000		-		-		1,000,000
Fair value of compensation options granted (Note 4)	-		-		302,456		-		302,456
Net and comprehensive loss for theyear	-		-		-		(166,801)		(166,801)
Balance at March 31, 2021	3,677,623	$	8,437,198	$	1,505,727	$	(9,274,267)	$	668,658

The accompanying notes are an integral part of these financial statements.

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GOLDSHORE RESOURCES INC. (FORMERLY SIERRA MADRE DEVELOPMENTS INC.) (AN EXPLORATION STAGE COMPANY) Statements of Cash Flows

(in Canadian Dollars)

		For the Years	Ended	Ended
	March 31, 2021			March31,2020
Cash flows provided from (used in):
OPERATING ACTIVITIES
Net loss for the year	$	(166,801)	$		(39,867)
Net changes in non-cash working capital items:
Amounts receivable		13,913			(1,898)
Accounts payable and accrued liabilities		(478,763)			(114,481)
Net cash flows used in operating activities		(631,651)			(156,246)
FINANCING ACTIVITIES
Proceeds from issuance of shares		1,000,000			-
Deferred financing costs (Note 4)		(579,420)			-
Subscriptions received in advance (Note 4)		10,000,000			-
Net cash provided by financing activities		10,420,580			-
Net increase (decrease) in cash and restricted cash		9,788,929			(156,246)
Cash and restricted cash, beginning of year		5,882			162,128
Cash and restricted cash, end of year	$	9,794,811	$		5,882
Supplemental cash flow information:
Cash	$	374,231	$		5,882
Restricted cash		9,420,580			-
	$	9,794,811	$		5,882

The accompanying notes are an integral part of these financial statements.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

Goldshore Resources Inc. (formerly Sierra Madre Developments Inc.) (“the Company”) is a gold focused Canadian exploration company. The Company’s head office is located at 918 – 1030 West Georgia Street, Vancouver, British Columbia, V6E 2Y3 and its registered and records office is at 400 – 725 Granville Street, Vancouver, British Columbia, V7Y 1G5.

The Company’s shares are listed on the NEX branch of the TSX Venture Exchange under the symbol SMG.H. Subsequent to March 31, 2021, on June 4, 2021 the Company changed its name to Goldshore Resources Inc. and began trading on the TSX-V under the symbol GSHR.

These financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the ordinary course of operations. As at March 31, 2021, the Company’s current assets exceeded its current liabilities by $668,658 (March 31, 2020 – deficiency of $466,997) and had an accumulated deficit of $9,274,267 (March 31, 2020 - $9,107,466). The Company currently has no active business and no source of revenue.

On March 11, 2020, the World Health Organization characterized the outbreak of a strain of the novel coronavirus (“COVID-19”) as a pandemic which has resulted in a series of public health and emergency measures that have been put in place to combat the spread of the virus. The duration and impact of COVID-19 is unknown at this time, and it is not possible to reliably estimate the impact that the length and severity of these developments will have on the financial results and condition of the Company in future periods, including the possible impact on future financing opportunities.

There is a material uncertainty related to conditions and events that may cast significant doubt on the Company’s ability to continue as a going concern, and the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.

The Company’s ability to continue as a going concern is dependent upon its ability to raise equity capital or borrowings sufficient to meet current and future obligations. The business of mining and exploration involves a high degree of risk and there can be no assurance that management’s plans will be successful. These financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material.

2. BASIS OF PRESENTATION

Statement of Compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations of IFRS Interpretations Committee (“IFRIC”) applicable to the preparation of financial statements. The significant accounting policies have been applied consistently to all period presented in these financial statements.

Basis of Preparation

These financial statements have been prepared on an accrual basis, except for cash flow information, and are based on historical costs, except for certain financial instruments carried at fair value. The Company’s functional and presentation currency is the Canadian dollar.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020

(in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

a) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank deposits and short-term investments with original maturity dates of three months or less which are readily convertible into a known amount of cash and subject to insignificant risk of changes in value.

Restricted cash includes the proceeds from the brokered private placement received. The funds are held in escrow pending satisfaction of certain conditions.

As at March 31, 2021 and 2020, the Company had no cash equivalents.

b) Foreign Currency Translation

Transactions in foreign currencies are translated to the functional currency of the Company at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are retranslated at the period-end date exchange rates. Non-monetary items which are measured using historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Foreign currency translation adjustments are recorded in profit or loss for the year.

• c) Exploration and Evaluation Expenditures

Exploration and evaluation activities involve the search for minerals, the determination of technical feasibility, and the assessment of commercial viability of an identified resource.

The Company expenses all costs related to expenditures on mineral property interests, for which the Company does not possess unrestricted ownership and exploration rights, on a property-by-property basis. Such costs include mineral property acquisition costs pursuant to option agreements and exploration expenditures, net of any recoveries.

From time-to-time, the Company may acquire or dispose of a mineral property interest pursuant to the terms of an option agreement. As such options are exercisable entirely at the discretion of the optionee the amounts payable or receivables are not recorded at the time of the agreement. Option payments are recorded as property costs or recoveries when the payments are made or received.

• d) Earnings (Loss) per Share

Earnings (loss) per share is calculated using the weighted average number of shares outstanding during the reporting period. The Company uses the treasury stock method for computing diluted earnings per share. This method assumes that any proceeds obtained upon exercise of dilutive outstanding options or warrants would be used to purchase common shares at the average market price during the period. Diluted loss per share is equivalent to basic loss per share, as the potentially dilutive securities would be anti-dilutive.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

e) Share Issue Costs

Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred financing costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise, they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred financing costs related to financing transactions that are not completed are charged to profit or loss.

• f) Estimates and Judgements

The preparation of the financial statements require management to make certain judgements, estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Management has determined that the Company has no reported amounts that require significant estimates.

Management has applied its judgement in evaluating the Company’s ability to continue as a going concern and related disclosures, as well as concluding that the subscriptions received in advance are appropriately classified as a liability.

• g) Financial Instruments

The Company recognizes a financial asset or financial liability on the statement of financial position when it becomes party to the contractual provisions of the financial instrument. Financial assets are initially measured at fair value and are derecognized either when the Company has transferred substantially all the risks and rewards of ownership of the financial asset, or when cash flows expire. Financial liabilities are initially measured at fair value and are derecognized when the obligation specified in the contract is discharged, cancelled or expired.

A write-off of a financial asset (or a portion thereof) constitutes a de-recognition event. Write-off occurs when the Company has no reasonable expectations of recovering the contractual cash flows on a financial asset.

Classification and Measurement

The Company determines the classification of its financial instruments at initial recognition. Financial assets and financial liabilities are classified according to the following measurement categories:

• i. those to be measured subsequently at fair value, either through profit or loss (“FVTPL”) or through other comprehensive income (“FVTOCI”); and

• ii. those to be measured subsequently at amortized cost.

The classification and measurement of financial assets after initial recognition at fair value depends on the business model for managing the financial asset and the contractual terms of the cash flows. Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortized cost at each subsequent reporting period. All other financial assets are measured at their fair values at each subsequent reporting period, with any changes recorded through profit or loss or through other comprehensive income (which designation is made as an irrevocable election at the time of recognition).

10

GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

After initial recognition at fair value, financial liabilities are classified and measured at either:

• i. amortized cost;

• ii. FVTPL, if the Company has made an irrevocable election at the time of recognition, or when required (for items such as instruments held for trading or derivatives); or

• iii. FVTOCI, when the change in fair value is attributable to changes in the Company’s credit risk.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

h) Financial Instruments (continued)

Transaction costs that are directly attributable to the acquisition or issuance of a financial asset or financial liability classified as subsequently measured at FVTOCI or amortized cost are included in the fair value of the instrument on initial recognition. Transaction costs for financial assets and financial liabilities classified at FVTPL are expensed in profit or loss.

The Company’s financial assets consists of cash and restricted cash, which are classified and measured at FVTPL, with realized and unrealized gains or losses related to changes in fair value reported in net loss. The Company’s financial liabilities consist of accounts payable and accrued liabilities, and subscriptions received in advance, which are classified and measured at amortized cost using the effective interest method. Interest expense is reported in net loss.

The effective interest method is a method of calculating the amortized cost of a financial asset or liability and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial asset or liability, or where appropriate, a shorter period.

Impairment

The Company assesses all information available, including on a forward-looking basis the expected credit losses associated with any financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information.

Fair values of financial instruments

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy based on the degree to which the inputs used to determine the fair value are observable. The three levels of the fair value hierarchy are:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020

(in Canadian Dollars)

• i) Income Taxes

Current income taxes are recognized for the estimated income taxes payable or recoverable for the current year. Deferred income tax assets and liabilities are recognized for temporary differences between the tax and accounting bases of assets and liabilities. Deferred income tax assets and liabilities are measured using substantially enacted tax rates that apply for the years in which the temporary differences are expected to be recovered or settled. Deferred income tax assets are recognized to the extent that it is probable the asset will be realized.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

• j) Share-based Compensation

The Company records all share-based payments at fair value. Share-based compensation expense for share option grants to employees and others providing similar services is based on the fair value of the stock options issued at the grant date, which is determined using the Black-Scholes Option Pricing Model. Where equity instruments are granted to non-employees, they are recorded at the fair value of goods or services received. When the value of goods or services cannot be reliably estimated, the Black-Scholes Option Pricing Model is used. Compensation expense for share options granted to non-employees is recognized as the options are earned and the services are provided. Compensation expense for share options granted to employees is amortized over the vesting period using the graded vesting model. On exercise of stock options, consideration paid together with the fair value amount previously credited to reserves is recorded as share capital. On expiry of share options, the related share-based compensation previously credited to reserves, remains in reserves.

• k) Upcoming Standards

The Company is not aware of any upcoming accounting standards that would be material to the financial statements of the Company.

4. SHARE CAPITAL

Authorized share capital

Unlimited number of common shares without par value.

Issued share capital

On August 4, 2020, the Company completed a share consolidation of 1 new share for every 2 outstanding shares and on May 27, 2021, the Company completed a share consolidation of 1 new share for every 6 outstanding shares. All share and per share amounts in these financial statements have been retroactively restated to reflect these consolidations.

At March 31, 2021, there were 3,677,623 issued and fully paid common shares (March 31, 2020 – 899,845).

On August 4, 2020 the Company closed a private placement for gross proceeds of $1,000,000 through the issuance of 2,777,778 shares at $0.36 per share.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

Subscriptions received in advance

On January 25, 2021, amended and restated on February 16, 2021, the Company signed an amalgamation agreement contemplating a reverse takeover transaction with a company formerly named Goldshore Resources Inc. (“Former Goldshore”) and its wholly-owned subsidiary (the “Amalgamation”). Pursuant to the Amalgamation, all Former Goldshore common shares were to be exchanged for common shares of the Company on a one-forone basis and Former Goldshore and its subsidiary were to be amalgamated, with the resulting entity to continue as a wholly owned subsidiary of the Company (the “Resulting Issuer”).

On February 26, 2021, the Company closed a brokered private placement by issuing 13,333,335 Flow-Through Subscription Receipts at a price of $0.75 per Flow-Through Subscription Receipt for gross proceeds of $10,000,000. As at March 31, 2021, the subscriptions received in advance were classified as a liability because the gross proceeds of $10,000,000 were held in escrow (the “Escrowed Funds”) pending satisfaction of certain conditions (“Escrow Release Conditions”), including the closing of the Amalgamation and receiving conditional approval for the resulting issuer’s shares being listed on the TSX-V. Subsequent to March 31, on June 1, 2021 the funds were released from escrow concurrent with the completion of the reverse takeover transaction and commencement of trading on the TSX-V (Note 9).

4. SHARE CAPITAL (continued)

In connection with the closing of the private placements, the Company incurred cash share issuance costs and commissions totalling $579,420 to be paid from the Escrowed Funds. Additionally, the Company issued a total of 772,560 non-transferrable compensation options (“Compensation Options”) to agents. Upon completion of the reverse take over transaction, each Compensation Option was exchanged for one compensation option of the Resulting Issuer, which is exercisable for one Resulting Issuer common share at a price of $0.75 for 24 months after the Escrow Release Date. The fair value of the Compensation Options was determined to be $302,456 using the Black-Scholes Option Pricing Model using the following assumptions: risk-free rate of 0.30%, expected life of 2 years, volatility factor of 100% and dividend yield of Nil. The fair value of the Compensation Options, cash share issue costs and commissions were recorded as deferred financing costs on the statement of financial position.

Stock options

The Company has adopted a 10% rolling Stock Option Plan (the “Plan”). Under the Plan, the Company may grant stock options to directors, officers, employees and consultants of the Company. The terms and conditions of the options are determined by the Board of Directors. As at March 31, 2021 and March 31, 2020, the Company had no stock options outstanding.

Reserves

The reserves consist of adjustments to equity and additions related to compensation options.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

5. RELATED PARTIES

Key management personnel is considered to include the Company’s directors and officers. For the year ended March 31, 2021 and 2020, the Company incurred the following compensation transactions with key management personnel:

	For the Years	ended
	March 31, 2021	March	31, 2020
	$		$
Accounting and compliance services	33,726		14,700
Consultingservices	21,300		-
Total*	55,026		14,700

• Included in Professional fees in the Statements of Loss and Comprehensive Loss.

At March 31, 2021, the Company owed $3,150 (March 31, 2020 - $6,000) in respect of services provided to and payments made on behalf of the Company. These amounts are unsecured, non-interest-bearing and have no specific terms of repayment.

6. INCOME TAX

a) Reconciliation of Canadian income taxes at statutory rates with the reported income taxes as follows:

YearendMarch31,	2021	2020
Net loss for the year	$ 166,801	$ 39,867
Statutorytax rate	27.00%	27.00%
Expected income tax recovery	(45,036)	(10,764)
Change in unrecognized temporarydifferences	45,036	10,764
Total income tax recovery	-	-

6. INCOME TAX (continued)

b) The significant components of deferred tax assets are as follows:

YearendMarch31,	2021	2020
Noncapital losses carried forward	$ 2,960,000	$ 2,795,000
Exploration and evaluation costs	232,696	232,696
Deductible temporary differences	3,192,696	3,027,696
Unrecognized deductible temporarydifferences	(3,192,696)	(3,027,696)
	-	-

Deferred tax asset items have not been recognized in these financial statements due to uncertainty as to their realizability.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020

(in Canadian Dollars)

• c) As at March 31, 2021, the Company has available non-capital losses for Canadian income tax purposes of approximately $2,960,000 which may be carried forward and applied against future taxable income as follows:

	$
2030	318,000
2031	379,000
2032	665,000
2033	462,000
2034	451,000
2035	77,000
2036	62,000
2037	72,000
2038	60,000
2039	208,000
2040	40,000
2041	166,000
	2,960,000

7. FINANCIAL INSTRUMENTS

• a) Categories of financial instruments and fair value measurements

The Company’s financial assets and liabilities are classified as follows:

	March 31, 2021	March 31, 2020
Financial assets:
Fair value through profit or loss
Cash	$ 374,231	$ 5,882
Restricted Cash	9,420,580	-
Financial liabilities:
Amortized cost
Accounts payable and accrued liabilities	$ 9,849	$ 488,612
Subscriptionsreceivedinadvance	10,000,000	-

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020

(in Canadian Dollars)

7. FINANCIAL INSTRUMENTS (continued)

• a) Categories of financial instruments and fair value measurements

The amount of accounts payable and accrued liabilities includes amounts due to related parties.

The fair values of the Company’s cash and restricted cash are carried at fair value in accordance with level 1 of the fair value hierarchy. The Company’s accounts payable and accrued liabilities and subscriptions received in advance approximate their carrying amounts due to the short-term nature of these instruments.

• b) Management of financial risks

The Company's risk exposures arising from financial instruments and the impact on the Company's financial statements are summarized below:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. As at March 31, 2021, the Company was exposed to credit risk on its cash. The Company’s cash and restricted cash is held with a high credit quality financial institution in Canada and as at March 31, 2021, management considers its exposure to credit risk to be low.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities. The Company manages liquidity risk by maintaining adequate cash and managing its capital and expenditures.

At March 31, 2021, the Company had cash of $374,231 (March 31, 2020 - $5,882) and accounts payable and accrued liabilities of $9,849 (March 31, 2020 - $488,612) with contractual maturities of less than one year. The Company had sufficient cash to meet its current liabilities as at March 31, 2021. The Company assessed its liquidity risk as low as at March 31, 2021.

Market risk

The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The Company is not exposed to significant currency, interest or other price risk.

8. CAPITAL MANAGEMENT

The Company considers its capital structure to consist of shareholders’ equity (deficit), which at March 31, 2021 totalled $668,658 (March 31, 2020 – deficit of $466,997). The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to any externally imposed capital requirements.

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GOLDSHORE RESOURCES INC. (Formerly Sierra Madre Developments Inc.) (An Exploration Stage Company) Notes to the Financial Statements For the years ended March 31, 2021 and 2020 (in Canadian Dollars)

9. SEGMENT DISCLOSURES

The Company operates in a single operating segment in the geographic location of Canada, the exploration for and evaluation of mineral property interests.

10. SUBSEQUENT EVENTS

On June 1, 2021, the Company completed the previously announced reverse take over transaction with Former Goldshore, a private company with a mandate to identify and evaluate mining related projects in North America. The Company commenced trading on the TSX-V on June 4, 2021 under the ticker symbol “GSHR”. The reverse takeover was completed pursuant to the terms of an amalgamation agreement dated January 25, 2021 as amended and restated on February 16, 2021, among the Company, 1284403 B.C.C Ltd. (a company incorporated by the Company for the purpose of the reverse takeover acquisition) and Former Goldshore.

Prior to the reverse takeover taking effect:

• The Company consolidated its common shares on the basis of 6 old common shares into 1 new common share (as previously disclosed, and retroactively applied within these financial statements); and

• Former Goldshore completed the asset acquisition of a 100% interest in the Moss Lake gold project, located in Ontario, Canada, from Wesdome Gold Mines Ltd. (“Wesdome”)

In conjunction with the close of the transaction, the Company made the following common share issuances and cash payments:

• Issued 13,333,335 shares in accordance with the conversion of the Flow-Through Subscription Receipts;

• Issued 30,122,381 shares to Former Goldshore shareholders in accordance with the reverse takeover;

• Issued 23,076,924 shares in accordance with the conversion of subscription receipts of Former Goldshore; and

• Issued 30,085,000 shares and paid $12,500,000 cash to Wesdome in accordance with the acquisition of a 100% interest in the Moss Lake gold project.

In connection with the transaction, the Company owes future consideration consisting of:

• $20,000,000 in common shares to Wesdome in the form of milestone payments consisting of: o $5,000,000 within 12 months of closing;

• $7,500,000 upon the earlier of (i) the Company completing an updated Preliminary Economic Assessment (“PEA”) or pre-feasibility study; and (ii) 30 months from closing; and

• $7,500,000 upon the earlier of (i) the Company completing a feasibility study, (ii) the date on which the Company makes a development decision on Moss Lake, and (iii) 48 months from closing.

• Grant to Wesdome a 1.00% net smelter royalty (“NSR”) on all metal production from Moss Lake. The Company shall have the right to repurchase the NSR for (i) $5,000,000 within 30 months of closing or (ii) $7,500,000 between 30 and 48 months after closing. The NSR buyback shall expire if not exercised within 48 months of closing.

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